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To: GraceZ who wrote (223026)	2/20/2003 8:54:06 PM
From: patron_anejo_por_favor	Read Replies (3) \| Respond to of 436258

<<Hmmm, so the dollars we pay for these goods sits somewhere for a period of time before it comes back and is invested in dollar denominated assets?>> Yep, banks, US subs of foreign companies, US assets. The point is the flows will reverse when the US is no longer "outperforming" economically (which in the current environment means when the consumer stops increasing his debt load). Then it all goes into reverse. Capital flows reverse via repatriation (yes, it doesn't happen overnight, more like years to decades), the dollar drops, inflation rises (nah, no signs of that around here, right?) And the deficits contract. It's an epiphenomenon, and it signifies huge problems that have not yet come home to roost, but most assuredly will. A cyclical phenomenon in short, and a nasty one at that....